Here’s a quick news round up, about the largest merger in the Brazilian banking history. Itau and Unibanco have announced a joint-venture yesterday creating the largest bank in Latin America – arguably the first major banking player in Latin America – combining about $260 billion in assets. The new Itau-Unibanco has also already announced investments in Mexico, Colombia and Peru. The press in Brazil has welcomed the merger, seen as a good timing to make the country’s financial system more solid to face tough times.

From The Wall Street Journal: “Brazil’s central bank recently announced a $50 billion program of currency swaps to keep financial institutions operating amid the credit squeeze. “This concentration will help strengthen the local financial system,” Finance Minister Guido Mantega told reporters in Brasilia.”

Washington Post: The banks did not give a value for their all-stock transaction, but Sao Paulo-based consultancy Economatica estimated the combined banks would have a market value of $41.3 billion, eclipsing Brazil’s state-owned Banco Brasil and the publicly traded Banco Bradesco.

Financial Times: “This operation takes place at a time of great changes and opportunities in the world, particularly in the financial sector,” they said, adding that Brazil’s banking industry was “in a privileged position, with enormous potential to improve its situation even more in relation to the rest of the world”.

The New York Times: “Whoever says the entire world needs to deleverage hasn’t paid attention to what’s happening in Brazil. Banco Itaú’s $15 billion takeover of a rival, Unibanco, should change that. The deal, announced Monday, creates Latin America’s biggest financial institution, which may become one of the few bright spots in the global banking firmament.”

AFP: “Together, Itau and Unibanco will have assets of 575 billion reais (265 billion dollars) and account for around 20 percent of Brazil’s savings accounts and credit. According to Fortune magazine, Itau made two billion dollars in profits last year from 29 billion dollars in revenues and 168.6 billion dollars in assets. Itau Unibanco would have a “strong international presence,” notably in the countries in the Mercosur trade bloc that comprises Argentina, Brazil, Paraguay and Uruguay, it said.

At Fábio Marangoni’s printing works in São Paulo, pages of glossy magazines emerge almost silently from modern printing presses imported from Germany.

Asked how much he borrowed to install the presses, Mr Marangoni replies with an air of self-satisfaction.

“Nothing,” he says. “We used our own capital.” His family-owned business will be 50 years old next year. “During that time we’ve seen the currency go wildly up and down. Our raw materials and machinery are priced in dollars, so we’ve always taken care to use our own money. It means we have grown more slowly than otherwise. But it’s worth it. Look what’s happening now.”

Mr Marangoni’s caution has not shielded him entirely from the chaos in the world’s financial system. Credit conditions have tightened and consumers and businesses are putting spending plans on hold.

Nevertheless, Brazil should emerge relatively unscathed. Economists who previously expected growth of between 4.5 and 5.5 per cent next year now expect between 2.5 and 3.5 per cent – by no means bad compared with the global outlook.

Not all companies have been as conservative as Mr Marangoni’s. Grupo Votorantim, an industrial conglomerate, said on Friday it had paid R$2.2bn ($958m) to liquidate positions in currency derivatives. It was the third large company to announce big losses on currency bets and is unlikely to be the last.

Local media are talking of “the Brazilian subprime”. Some observers expect to see bankruptcies as more exporters are forced to admit that they exposed themselves beyond sensible limits to currency contracts that worked in their favour during the real’s long rally from R$3.95 to the US dollar in October 2002 to R$1.56 in May this year but which turned against them during its subsequent fall.

On the whole, however, Brazilian companies are much less indebted than their foreign competitors. The total amount of credit in Brazil was equal to 38 per cent of gross domestic product in August, much less than in many developed countries. where credit reaches multiples of GDP.

Economists and business leaders have long been calling on the government to enact spending reforms to release more money to finance investment and consumption through credit. There has indeed been a consumer-led acceleration of growth in the past few years, as lower interest rates, rising employment and enduring economic stability have encouraged borrowing.